Taxes are the major source of mobilizing internal resources of an economy. Bangladesh revenue structure has been burdened by taxes from indirect sources for long time and usually characterized by heavy import and excise duties. To cope with the challenge due to globalization, government of many such countries has to cut down such duties and levies. It seems that government might have to collect more money either through VAT (Value Added Tax) or from direct taxes. In Bangladesh VAT introduced in 1991 by replacing the sales taxes is still known as the vital reform in Bangladesh revenue structure. The remaining potential sector is the income taxes sharing almost all taxes coming through direct sources. Tax base is too narrow and the tax law is full of exemptions and allowances. Agriculture sector provides employment for around 60percent of the population contributes only 25 percent of GDP and virtually pays little in the form of income tax. There are many affluent people lying in the category of agricultural income and more such people avoiding taxes showing their entire income as a means of agriculture. However share of direct taxes has averaged a little improvement but not attained expected consistency as needed. Thus to combat with the upcoming challenges of globalization and expected rapid shrinking of tariffs, it seems now to overhaul the tax structure and to concentrate more on widening the tax base for VAT and income taxes.
Tax is a compulsory levy imposed by the Government. People pay taxes to the Government on the basis of what they earn, what they own and what they purchase. A tax is a compulsory payment levied on the persons or companies to meet the expenditure incurred on conferring common benefits upon the people of a country. Two aspects of taxes follow from this definition:
A tax is a compulsory payment and no one can refuse to pay it. Proceed from taxes are used for common benefits or general purposes of the state. Classification Of Tax:
On the basis of tax rate
.Progressive Tax: A tax that takes a larger percentage from the income of high-income earners than it does from low-income individuals. Basically, taxpayers are broken down into categories based on taxable income; the more one earns, the more taxes they will have to pay once they cross the benchmark cut-off points between the different tax bracket levels. Proportional Tax: A tax system that requires the same percentage of income from all taxpayers, regardless of their earnings. A proportional tax applies the same tax rate across low-, middle- and high-income taxpayers. The proportional tax is in contrast to a progressive tax, where taxpayers with higher incomes pay higher tax rates than taxpayers with lower incomes Regressive Tax: A tax that takes a larger percentage from low-income people than from high-income people. A regressive tax is generally a tax that is applied uniformly. This means that it hits lower-income individuals harder. On the basis of impact and incidence
Direct Tax: A tax that is paid directly by an individual or organization to the imposing entity. A taxpayer pays a direct tax to a government for different purposes, including real property tax, personal property tax, income tax or taxes on assets. Direct taxes are different from indirect taxes, where the tax is levied on one entity, such as a seller, and paid by another, such a sales tax paid by the buyer in a retail setting. Indirect Tax: A tax that increases the price of a good so that consumers are actually paying the tax by paying more for the products. An indirect tax is most often thought of as a tax that is shifted from one taxpayer to another, by way of an increase in the price of the good. Fuel, liquor and cigarette taxes are all considered examples of indirect taxes, as many argue that the tax is...
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